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Jobs +165,000, Part-Time Employment +441,000; Unemployment Rate 7.5%; Dow Tops 15,000

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Published : May 03rd, 2013
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Category : Opinions and Analysis

Initial Reaction

The establishment survey showed a gain of 165,000 a reasonably good but not spectacular print. In contrast, the household survey showed a huge gain of 293,000 jobs.

Once again we see a huge surge in involuntary part-time employment of 278,000. Voluntary part-time employment rose by another 163,000.

Voluntary plus involuntary part-time employment rose by a whopping 441,000 jobs. Take away part-time jobs and there is not all that much to brag about. Indeed, full-time employment fell once again, this month by 148,000. 

The civilian labor force rose by 210,000 for a change, thus the actual number of unemployed only fell by 83,000 (293,000 - 210,000), enough to lower the unemployment rate 0.1 percentage points to 7.5%.

The Participation Rate was flat at 63.3%, a low dating back to 1979.

Duration of unemployment numbers showed a statistical anomaly this month. Unemployment in the 27 weeks or over category reportedly fell by 258,000 while unemployment for 15-26 weeks rose by 230,000. Color me very skeptical of these numbers.

The stock market was giddy over jobs, with the Dow topping 15,000 for the first time. Then again the stock market has generally been giddy over any news, good bad or indifferent.

April BLS Jobs Report at a Glance

  • Payrolls +165,000 - Establishment Survey
  • US Employment +293,000 - Household Survey
  • US Unemployment -83,000 - Household Survey
  • Involuntary Part-Time Work +278,000 - Household Survey;
  • Voluntary Part-Time Work +163,000 - Household Survey
  • Baseline Unemployment Rate -0.1 - Household Survey
  • U-6 unemployment +0.1 to 13.9% - Household Survey
  • The Civilian Labor Force +210,000 - Household Survey
  • Not in Labor Force -31,000 - Household Survey
  • Participation Rate +0.0 at 63.3 - Household Survey


Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

Quick Notes About the Unemployment Rate

  • In the last year, those "not" in the labor force rose by 1,604,000
  • Over the course of the last year, the number of people employed rose by 1,645,000
  • In the last year the number of unemployed fell from 12,686,000 to 11,742,000 (a drop of 859,000)
  • Long-Term unemployment (27 weeks and over) was 4,353,000 - a decline of 687,000 from a year ago
  • Percentage of long-term unemployment is 37.4%. Once someone loses a job it is still very difficult to find another.
  • 7,916,000 workers who are working part-time but want full-time work. A year ago there were 7,694,000. There has been no improvement in a year. This is a volatile series.


April 2013 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) April 2013 Employment Report.

Total nonfarm payroll employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, food services and drinking places, retail trade, and health care.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted



Month to Month Changes



click on chart for sharper image

Hours and Wages

Private average weekly hours fell 0.2 to 34.4 hours. Average hourly earnings rose $0.04 to $23.87. Average weekly earnings fell from $824.52 to $821.13 due to fewer hours worked.

Real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly. For 2013, one needs to factor in the increase in payroll taxes for Social Security.

For further discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2012



Birth Death Model Adjustments For 2013



Birth-Death Notes

Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.

In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.

For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.

Household Survey Data



Decline in Labor Force Factors

  1. Discouraged workers stop looking for jobs
  2. People retire because they cannot find jobs
  3. People go back to school hoping it will improve their chances of getting a job
  4. People stay in school longer because they cannot find a job

Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%. In addition, there are 7,916,000 workers who are working part-time but want full-time work. A year ago there were 7,694,000. There has been no improvement in a year. This is a volatile series.

Table 15 BLS Alternate Measures of Unemployment



click on chart for sharper image

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 7.5%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 13.9%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Grossly Distorted Statistics

Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.

Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are improving, yet remain much worse than the reported numbers indicate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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